Market Commentary

September 2026

Fear and Opportunity

“Every new invention shows up polite as a preacher on Sunday. By Thursday it’s rearranged

 the Household, borrowed your chair and taught the dog new opinions. We call it progress  

 because disruption sounds rude.”  - Mark Twain

30 years ago, Bill Gates appeared on the David Letterman Show. Dave questioned the usefulness of the internet suggesting it might be a fad. When Gates gave the example of listening to a baseball game on your computer Dave quipped “are you familiar with the radio?” The audience of course roared and cheered.

History is replete with examples of our fear of new technology. Socrates was dismissive of handwriting ideas on paper for fear of people dulling their memories.

US President Benjamin Harrison was so distrustful of the electrification of society in the late 19^th century that he had his White House staff turn the lights on and off for fear he might be electrocuted.

Where am I going with this? I hear echoes of this sort of fear when I read about the Anti Data Centre movement. A 2026 Ipsos poll shows that 57% of Americans oppose the development of Data Centres in their communities. In her June 16^th New York Post article “Panic Over Data Centres “Rikki Schlott argues that the anti-data centre push is more a moral panic than an evidence based one. “The data centre is the boogeyman onto which the fears of AI are being projected “

There are valid concerns about data centre power and water consumption. There are a lot of misconceptions as well. Author Karen Hao in her book:” Empire of AI” exaggerated the power use in a Chilean data centre by a factor of 1000. Although easily disproven the number is out there and people still quote it.

Big numbers scare people especially when given no context. In 2023 the Lawrence Berkley National Laboratory reported that US Data Centres used 17.4 billion gallons of water. Sounds like a lot and it is. Consider that in the same year California Avocado farms used 245 billion gallons of water and golf courses a whopping 476 billion.

It is all about tradeoffs. The benefits of AI in our lives in fields like healthcare, safety and productivity cannot be overstated.

Block Chain is another misunderstood technology. There are significant benefits of a secure, shared record keeping system (Ledger). Examples of the benefits include instant investment transaction settlement for one.

At the moment most digital transactions settle (buyer pays/seller delivers shares to buyer and receives payment) in 1 or 2 days. Financial intermediaries take on the risk that both parties will live up to their part of the bargain. Estimates are that transaction costs would be reduced by 20% if the settlement were immediate.

I am going to use a wonky term “Tokenization.” Tokenization refers to converting assets such as investments into digital form located on a shared programmable Ledger (record keeping system) for financial transactions. This Ledger and the associated transaction confirmation would be facilitated by Blockchain technology.

Block Chain is the technology that enables the very existence of Digital Currencies including Bitcoin.

Connecting the dots I can see how Artificial Intelligence could be  the third leg of the stool in this scenario is. The alliance of Tokenization, Block Chian and AI will be at the heart of the transaction process for many applications. Not only Banking and Finance but things like supply tracking to trace goods from production to retail stores. Think about the recent lettuce problem in the US.

The Republican Administration in Washington is keen to see the US become the World leader in these new technologies. There is legislation which has been introduced and will be voted on later this year, “The Clarity Act,” that seeks to advance Digital Currency   activity and regulations.

Ok enough tech talk. Markets in general have been volatile this summer. July saw large declines happening in the high-flying AI Infrastructure, Semiconductor and Memory Chip sectors. I am in no hurry to buy the more aggressive names even after their 25-35% decline. Most are still far above their longer-term average prices having doubled or in some cases tripled in the last year. Momentum investors can be fickle. Tom Lee from Fundstrat Global Advisors describes the sell off as “Rage Quitting.”

I am still positive about the prospects for the broader stock markets. At the start of 2026, the stock market was counting on as many as four interest rate cuts. The bond market has subsequently taken all of those cuts off the table due to inflation concerns. In fact, Forbes writes on Aug. 30/26   that the odds of a September rate hike have increased to 58%. This indicates to me that the Stock Market is pricing in this hike and the possibility of several more in the coming months.

It would not surprise anyone if the market had a correction between now and year end. The S&P has had three remarkably positive years, and I suspect many investors are getting closer to the exits. Timing markets is not a good strategy. A better plan would be to consider moving cash into more traditional large cap, non-tech names that have not had the outsized gains enjoyed by the tech world. Moreover, review your single stock or sector concentrations and consider rebalancing your portfolios to reduce risk and volatility. My team and I are here to review your personal situation anytime.

Cheers and Happy Labour Day!